Required:
Prepare a new contribution format income statement under each of the following conditions (consider each case independently):
a. The sales volume increases by 10% and the price decreases by $0.50 per unit.

b. The selling price decreases $1.00 per unit, fixed expenses increase by $15,000, and the sales volume decreases by 5%.

c. The selling price increases by 25%, variable expense increases by $0.75 per unit, and the sales volume decreases by 15%.

Management believes that inspection cost is a mixed cost that depends on direct labor-hours.
Required:
a. Using the high low method determine the variable cost per unit, the total fixed cost, and express in a formula.

b. Using the regression analysis determine the variable cost per unit, the total fixed cost, and express in a formula.
Explain what the regression analysis printout for this problem, tells you about the independent and dependent variable,
and the fixed cost or intercept. How good of a predictor is the model and how did you determine this.

Solution Summary

The two problems posted are solved using excel so the student can review the formulas in addition to following the process.